Great Fundamentals Do Not Always Make a Great Trade
ANET is a perfect example of a growth stock with strong earnings, strong sales, and impressive growth fundamentals that has still been extremely difficult to trade.
Since last September, the price action has been choppy, whipsawing, and lacking a clean, sustained trend. The stock repeatedly moves higher, reverses, breaks below prior lows, and then rallies again. That type of action can stop traders out even when the longer-term direction is eventually higher.
The only truly clean advance I see was the move from roughly April 8 through April 22. Outside of that brief stretch, the price action has been frustrating and inconsistent.
This is an important reminder that great fundamentals are not enough. A stock can be an outstanding company and still be a terrible trade.
I want strong earnings and sales, but I also want clean price action, clear accumulation, and price action that gives me a logical place to manage risk.
